Bernard Arnault’s wealth is over $200 billion. Indeed, Arnault is the CEO and chairman of the luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton. This massive luxury group generated over €86 billion in revenue ($93 billion) in 2023, spanning wine, fashion, cosmetics, and retail. The Arnault family group owns 48.6% of the capital for LVMH with 64.33% voting power, making Bernard Arnault the principal owner and decision-maker. His stake is worth over $200 billion.
Education and early career
In 1971, Arnault graduated from the École Polytechnique – France’s leading engineering school – and started work at his father’s construction company. Five years later, he convinced his father to liquidate the construction division and enter real estate instead.
Arnault become chief executive of the new company known as Férinel in 1977, which by that time was a developer of specialty vacation accommodation. In 1979, Arnault ultimately succeeded his father as president.
In response to the rise of French socialists and their objective to tax the rich, Arnault and his young family moved to Rochelle, New York, in 1981. He worked to grow the American subsidiary of the family business but soon returned to France a few years later in search of a new challenge.
Boussac Saint-Frères
By 1984, Arnault was a young real estate developer.
He heard that the French government was on the hunt for someone to take over Boussac Saint-Frères, a bankrupt retail and textile conglomerate that owned department store chain Le Bon Marché and luxury brand Christian Dior, among other assets.
With the assistance of friend and financier Antoine Bernheim, Arnault purchased the company for $80 million. Over the next two years, Arnault fired over 9,000 employees and sold Boussac’s textile operations for $500 million.
By 1987, the slimmed-down version of the company (which Arnault renamed Financiere Agache) posted a profit of $112 million on revenue of $1.9 billion.
Buoyed by his initial success and return on investment, Arnault then embarked on a buying spree to build a new company around the Christian Dior label. To fund his endeavors, Arnault sold 42% of the brand to the public in 1988 for $520 million.
LVMH
This spree started when Arnault was invited to invest in LVMH by company chairman Henri Racamier. After making a joint-venture investment with Guinness PLC, Arnault ousted Racamier in 1990 and went on the search for acquisitions.
There are now 75 brands under the LVMH stable with a retail network of 5,600 stores helping deliver €79.2 billion in revenue in 2022. The company’s 2022 revenue represented a near 80% increase over the €44.6 billion posted in 2020.
According to Forbes, Arnault visits as many as 25 stores every Saturday – including those of his competitors. In LVMH stores, he is known to suggest improvements to staff and may even reconfigure product displays.
Arnault’s involvement in LVMH started when was invited to invest in the company by Henri Racamier, the 77-year-old chairman of Louis Vuitton and second-in-charge of the merged entity.
Racamier was impressed by Arnault’s exploits and wanted to join forces with him after the former fell out with Alain Chevalier – the head of Moët Hennessy. While both men had built luxury goods empires, Racamier was shocked when Chevalier wanted Guinness to buy 20% of LVMH stock to prevent it from a hostile takeover.
Chevalier was also friends with Guinness chairman Anthony Tennant and had announced a prior joint distribution agreement with the company. Worried that Chevalier’s influence would make LVMH too exposed to the drinks business, Racamier turned to Arnault as a point of difference.
But there was a problem.
Guinness deal
Arnault consulted his investment banker Lazard Freres et Compagnie for advice, and as it turned out, the company was also Chevalier’s advisor. Lazard Freres facilitated a meeting between Arnault and Chevalier, and for whatever reason, Arnault switched allegiances and soon announced a joint venture with Guinness.
Some 60% of the JV would be controlled by Arnault’s company Agache which also included a 27% stake in LVMH. Arnault and his partners later increased their stake to 37%, and some posited that Arnault wanted to obtain a blocking minority amid speculation that LVMH would be split into several divisions.
LVMH aspirations
By 1989, Arnault had acquired 43.5% of LVMH and 35% of its voting rights. While he was considered ambitious by his counterparts, no one believed Arnault would take over the company or oust Racamier (a respected French businessman) before his time.
But Arnault did just that. He removed Racamier just a few years before he was due to retire and was unanimously voted to become chairman of the company. With his rapid ascent realized, Arnault wasted no time in enacting his expansion plans.
LVMH profits grew to $665.8 million by 1999 after acquisitions that included Berluti, Kenzo, Christian Lacroix, and Guerlain. LVMH also acquired a 34.4% stake in Gucci in what was termed a “creeping takeover”. However, the company sold its stake for a $700 million profit after a court ruling forced its hand.
Other pursuits
Aside from luxury brand acquisitions, Arnault is also an investor in web companies such as Boo.com, Zebank (Prudential), and Netflix. He also owns around 10% of Carrefour, the largest supermarket chain in France and the second-largest in the world for food distribution.
More recently, in 2008, he ventured into the yacht business with the purchase of Princess Yachts. LVHM also acquired the luxury yacht builder Royal Van Lent that same year.
In 2014, Arnault turned his attention elsewhere, working with Canadian-American architect Frank Gehry to design and construct the Fondation Louis Vuitton art museum in Paris.
LVMH Empire Today
Today, the LVMH empire is a company that has generated over €86 billion in revenue from a portfolio of incredible luxury brands.
It’s indeed tough to find any competitor to LVMH’s empire.
The main segment, fashion and leather goods, grew to over €42 billion in revenue by 2022, driven by Louis Vuitton.
Indeed, one other company has consolidated to become a luxury empire comparable to that of LVMH, and that is Kering!
Also owned by a French magnate, Kering owns incredible luxury brands.
An interesting fact is that throughout the late 1990s, when the luxury industry was consolidating, the luxury wars ensued, and those would heat up with the acquisition of Gucci by LVMH first.
However, LVMH could not keep control of Gucci, as the internal management set to fight Bernard Arnault’s takeover of the company.
Indeed, eventually, Gucci would be acquired by Kering. This turned into the most valuable acquisition that Kering made.
Today, Gucci is a brand that generated nearly €10.5 billion in revenue, representing over 50% of Kering’s turnover!
Key takeaways:
- Bernard Arnault is a French investor, art collector, and business magnate who was the richest person in the world in January 2023. Arnault is also the co-founder and chairman of the luxury goods conglomerate LVMH.
- Arnault joined his father’s construction company out of university and convinced him to pivot from construction to real estate. After becoming president, Arnault learned that the French government wanted someone to take over Boussac Saint-Frères, a bankrupt retail and textile conglomerate.
- Arnault embarked on a massive restructuring at Boussac to reverse its fortunes. He sold off its textile arm and used the funds to take a controlling stake in LVMH. From that point onward, the company has acquired over 70 luxury brands.
Key Highlights
- Early Life and Education:
- Bernard Arnault is an American entrepreneur and software engineer of German and Bangladeshi descent.
- He graduated from the École Polytechnique, France’s leading engineering school, and initially worked at his father’s construction company.
- Transformation of Boussac Saint-Frères:
- Arnault convinced his father to transition from construction to real estate.
- He took over Boussac Saint-Frères, a bankrupt retail and textile conglomerate, and restructured the company by selling off non-core assets and focusing on luxury brands.
- Formation of LVMH:
- Arnault used the proceeds from Boussac’s restructuring to take a controlling stake in LVMH (Moët Hennessy Louis Vuitton).
- With acquisitions and restructuring, LVMH grew to become a luxury goods conglomerate with a wide portfolio of brands spanning fashion, cosmetics, wines, and retail.
- Success of LVMH:
- The Arnault family group owns a significant stake in LVMH, and Bernard Arnault holds a leadership position with decision-making power.
- LVMH generated significant revenue, with the fashion and leather goods segment being a major contributor, driven by brands like Louis Vuitton.
- LVMH’s Growth and Dominance:
- Competition with Kering:
- LVMH faces competition from Kering, another French luxury group, which also owns a portfolio of luxury brands like Gucci, Bottega Veneta, and Saint Laurent.
- Kering’s acquisition of Gucci turned out to be highly valuable and contributed significantly to its revenue.
- Growth of Gucci and Luxury Wars:
- Gucci, initially targeted by LVMH for acquisition, eventually became a part of Kering and has become a major revenue driver for Kering.
- Additional Ventures and Philanthropy:
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